Classy Cooks did a major overhaul of their ovens, which extended the useful life of the ovens by 4 years. The journal entry to record this included a debit to repairs expense. This entry is:

Question

Quizplus · Accepted Answer

The journal entry is incorrect because the overhaul extended the useful life of the ovens, which should be capitalized and added to the asset's cost, not expensed. Expensing it immediately as a repair expense understates net income because it improperly recognizes an expense that should be allocated over the extended useful life of the ovens.

Classy Cooks Did a Major Overhaul of Their Ovens, Which